1.Health Care Innovation AwardsRound Two:Achieving Lower Costs Through ImprovementJune 20, 2013

2. Agenda Overview Introduction to Total Cost of Care andDemonstrating your Initiatives Ability to LowerCosts through Improvement Financial Plan Next Steps2 3. The CMS Innovation CenterIdentify, Test, Evaluate, ScaleThe purpose of the Center is to test innovativepayment and service delivery models to reduceprogram expenditures under Medicare, Medicaidand CHIPwhile preserving or enhancing the qualityof care.The Affordable Care Act3 4. Innovation Awards Round Two GoalsEngage innovators from the field to:Identify new payment and service delivery modelsthat result in better care and lower costs forMedicare, Medicaid, and Childrens Health InsuranceProgram (CHIP) beneficiariesTest models in Four Innovation CategoriesDevelop a clear pathway to new, sustainableMedicare, Medicaid and CHIP payment models4 5. Measuring Success BETTER CARE LOWER COSTS IMPROVED HEALTH STATUS5 6. 6Key DatesDate DescriptionJune 14, 2013 Application templates and user materialsare available athttp://innovation.cms.gov/initiatives/Health-Care-Innovation-Awards/Round-2.htmlJune 28, 2013 Letters of Intent due by 3:00 PM EDTAugust 15, 2013 Application due by 3:00 PM EDTEarly January 2014 Anticipated award announcement datesFebruary 28, 2014 Anticipated Notice of CooperativeAgreement AwardApril 1, 2014March 31, 2017 3-year Cooperative Agreement Period ofPerformance 7. Agenda Overview Introduction to Total Cost of Care andDemonstrating your Initiatives Ability to LowerCosts through Improvement Financial Plans Next Steps7 8. 8Medicares Spending Continues to Grow0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%1990199219941996199820002002200420062008201020122014201620182020Medicare Spending as Percent of GDP,19902020Source: Medicare Trustees Report - 2012 9. From 2008 to 2012, outpatient and post-acuteservices increased most rapidly9Total Trend42%45%14%5%15%17%31%8%0%5%10%15%20%25%30%35%40%Total Inpt Hospital SNF Outpt Phys Hospice HomeHospital Services HealthSource: CMS claims data 10. Wide Variation in Spending Across the Country10Miami, FL$3,165 per capitaMinot, ND$74 per capitaRatio to thenational averageHome Health Per Capita Spending National Average = $546 11. CT Scans Per Capita Spending*Wide Variation in Spending Across the Country(cont.)11(2011 National Average = $76)Fort Myers, FL$117 per capitaHonolulu, HI$49 per capita Ratio to thenational average*includes institutional and professional spending 12. ObjectivesIntroduction to Total Cost of Care Explain what we mean by Total Cost of Care. Explain how you compute baseline Total Cost of Care for thepopulation you serve. Explain how your intervention can reduce Total Cost of Care. Explain your budget and cost savings plan.12 13. What do we mean byTotal Cost of Care?13 14. Total Cost of Care DefinedThe Total Cost of Care we will discuss today describes dollarsspent by health care purchasers for health care services14Examples of Health CarePayors- Government- Medicare- Medicaid- Childrens HealthInsurance Program- Other- Private Insurers- Employers- Other Purchasers- Patient out-of-pocketTotal Costof Care Example Service Providers- Hospitals- Physicians- Community HealthCenters- Ancillary Service Providers- Other ServicesIncludes payment for thecomprehensive basket ofhealth care servicesutilized by a patient orpopulation 15. 15What is Included in Total Cost of Care?Total Cost of Care includes the complete range of health care servicesFor Medicare patients, including beneficiary contribution, the average total cost of care is ~$1,245 Per Beneficiary PerMonth (PBPM) for the following basket of servicesHow is ~$1,245 PBPM Spent?Labs $21 LTCH $14 Dialysis $14Inpatient, $336Prescript. DrugsE&M$239Outpatient$110SNF$102$95Other$71Procedure $68HH $59Hospice $37Imaging $28DME $22IRF $21ASC $9Figures include~20% morePBPM toaccount forpatientcontributionDefinitionsSNF: SkilledNursing FacilityHH: HomeHealthDME: DurableMedicalEquipmentLTCH: Long TermAcute CareHospitalE&M: Evaluationand Mgmt.ASC: AmbulatorySurgery CenterSource: Data adjusted from 2011 Medicare Fee for Service.Claims for illustrative purposes. 16. How Do You Compute Total Cost of Care?In 2011, Medicare Part A and B, excluding beneficiary contribution, paid approximately $838 PBPM16TOTAL COST OF CAREUNIT COSTPriceTOTAL UNITSVolumeANNUALCOST FOR1,000 BENESX =Outpatient $264 3,929 visitsX = 1,000BENES12Months$1,037,491 $1,037 $86SkilledNursingOtherTotal$11,528 83 covered staysX = $958,531 $959 $80$409$4,905$838$10,061CommonNomenclature$4,905,179$10,060,612Inpatient $10,460 302 covered staysX = $3,159,410 $3,159 $263Expenditure Services per Total Cost forPer Service 1,000 Benes. 1,000 Benes. PBPY PBPM 17. Total Cost of Care Varies for DifferentPopulationsThe basket of services your population uses and how much care they utilize will depend on their healthcare needs and the practice patterns of providers17EXAMPLE (NOT BASED ON ACTUAL DATA)Population A Population BPBPM $1,050 $500Total Cost of CareBasket of Services and Total Units (Admissions or Visitsper 1,000 Beneficiaries/Year)Inpatient UtilizationProfessional FeesOutpatient ServicesOther Services500 Admissions 250 Admissions1,000 Visits 2,000 Visits1,500 Visits 2,500 Visits750 Visits 1,000 VisitsUnit CostExpenditure Per Service Same for Population A and B Same for Population A and B 18. How can youcompute baselineTotal Cost of Carefor the populationyou serve?18 19. 19Cost of Care of Your PopulationTotal Cost of Care for your population will depend on their unique characteristics andpractice patterns of providers in your community1. Define your Population Current population served Proposed expansion population2. Determine the full Basket of Services that your population uses What services does your population utilize?3. Determine how many Total Units (i.e. volume or utilization) they are currently using What risk factors does your population exhibit? What is the disease prevalence of your population? What types of providers (e.g. specialists, long-term care facilities) are available in a region? What types of health systems are available in a region (e.g. academic, tertiary)?4. Determine the Unit Cost of those Services (i.e., price) How much do health care purchasers pay for the services your population uses? 20. Developing your Total Cost of Care Estimates Understanding what services you population uses, how much they use, and whatthose services cost may be difficult and will require significant research Applicants have many options to gather this information for their proposals:o Your own datao Data you obtain from the purchasers of service you are currently providingo Forging new partnerships with organizations that can provide datao Publicly available data We understand that applicants may not have all the required data to computetotal cost of care within their data systems. Applicants that develop thoughtful,data-driven estimates based on publicly-available data will be viewed as favorablyas applicants who have access to actual figures20 21. How will yourinterventionreduce Total Costof Care?21 22. Impact on Lower Costs Through ImprovementApplicants are expected to demonstrate a logical and thoughtful path to cost savingsthrough their intervention Once applicants complete the analysis of the baseline Total Cost of Care of theirpopulation, applicants should demonstrate how their improvement strategy will drivereductions to this baseline total cost of care Successful applicants are expected to demonstrate how their projects will drivemeaningful reductions to total cost of care along two primary dimensions:o Program-level net savings over the duration of each awardo Projected medical cost trend reduction that will continue after the cooperative agreement period iscomplete Applicants are required to complete the following two schedules to demonstrate therelationship between project expenditures and projected savingso Form SF-424Ao Financial Plan Additionally, applicants are encouraged to provide the logic behind their projections inthe budget narrative section of the application narrative. 22 23. Estimating Programs Ability to Reduce Costs Fundamentally, we are seeking to provide awards to organizations that willenable reductions in health care costs through improvement. Forexample,o Better coordinationo Improved safetyo Better use of health information technologyo Improved chronic disease managemento Improving workforce efficiency Proposals may demonstrate how funding their innovations will drivereductions elsewhere in the health system. For example,o Reduced avoidable emergency department visitso Reduced overall preventable acute care costso Reduced unnecessary procedures Applicants are encouraged to clearly articulate how their innovation willdrive meaningful reductions in expenditures 23 24. Estimating Programs Ability To ReduceCosts (contd) Applicants should thoroughly present a compelling, data-driven story to explain cost savingso Does your program reduce utilization? What services? By how much?o Does the current research/evidence on this intervention apply to your population? What have your results shown in the past?Howwill youachievetheseresults?Baseline :$3,609 PBPMPro Forma:$3,449 PBPM4.4% SAVINGSIntervention Cost toHealth Care Purchaser$77 PBPMPLUSReduce Cost to HealthCare Purchaser Throughimprovement: $236 PBPMMINUSEQUALSEXAMPLE (NOT BASED ON ACTUAL DATA)TOTAL UNITS UNIT COST TOTAL COST OF CAREServices Per 1000 Beneficiaries Expense Per Baseline Pro FormaSERVICE BASKET Baseline % Change Pro Forma Service/Episode PBPM PBPMInpatient HospitalAcute Inpatient 2,200 admits -10% 1,980 admits $10,460 $1,918 $1,726Post Acute CareHome Health 550 episodes 10% 605 episodes $2,689 $123 $136Inpatient LTCH 20 admits 20 admits $36,245 $60 $60Inpatient Rehab 95 admits 95 admits $17,074 $135 $135Skilled Nursing 400 admits -7% 372 admits $11,528 $384 $357Other Benefits / ServicesASC Procedures 700 events 700 events $490 $29 $29Dialysis 750 visits 750 visits $176 $11 $11DME 2,000 events 2,000 events $108 $18 $18Evaluation & Mgmt. 30,000 visits 15% 34,500 visits $67 $169 $194Hospice 200 admits 200 admits $10,556 $176 $176Imaging 7,500 events -7% 6,975 events $61 $38 $36Labs 15,000 events 15,000 events $23 $29 $29Outpatient 6,200 events -7% 5,766 events $264 $136 $127Prescript. Drugs N/A N/A N/A $239 $239Procedures 6,500 events -7% 6,045 events $133 $72 $67Other N/A 55% N/A N/A $71 $110Total Medicare Cost of Care $3,609 $3,44924 25. Agenda Overview Introduction to Total Cost of Care andDemonstrating your Initiatives Ability to LowerCosts through Improvement Financial Plan Next Steps25 26. Financial Plan Applicants need to fill out the Financial Plan Template todemonstrate costs and savings for their proposed model The Application User Guide contains useful definitions andresources for populating the financial plan The template and user guide is available athttp://innovation.cms.gov and http://www.grants.gov/26 27. Populating your Financial Plan The Savings Analysis- Combined spreadsheet will show where and how you intendto show savings.o Please insert values into blue boxes; clear boxes will auto-populate based on inputs made tofinancial plan summary and the Savings Analysis sheets The Financial Plan Summary is the section to input total baseline and proposedcosts per year for years 1-3. It is also where you estimate your target population.o Please insert values into the blue boxes; clear boxes will auto-populate based on inputs made tofinancial plan summary and the Savings Analysis sheetso Please note, total costs should in large part reconcile with the combined expenditures shown onSavings Analysis- Combined The four years shown are estimated costs consisting of a baseline year and threeyears of program performance. The baseline year does not imply federal fundingwill be available. All cents are rounded to the nearest dollar in the spreadsheet but are stored ascents.27 28. 28Your Financial PlanSavings Analysis TabServiceCategories- See theApplicationGuide fordetailedreferences onthe definitionsof eachcategoryBaseline Year is prior tothe project and does notinclude any federalfunding for this program. 29. 29Your Financial PlanSavings Analysis Tab (cont.)Reduction in Total Cost ofCare- This is the percentagedecrease in total cost ofcare that the proposal willproduce for both thecurrent population and theexpansion areaTotal Cost of Care AfterSavings Applied- This section automaticallycalculates the new cost ofcare after applying yourestimated reduction. 30. 30Your Financial PlanSummary TabTarget ParticipantCounts- Include the numberof beneficiariesprojected to beserved for which costsavings may berealizedTarget MemberMonthsConvert the count ofperson into eligiblemonths during theyear 31. Your Financial PlanSummary Tab (cont.)Proposed Savings- Automatically tallies from previous entries31Estimated Total ProposedModel Costs- In order to bestunderstand the paymentmodel expenses vs. servicedelivery we are asking foryou to estimate totalproposed costs by thesecategories. 32. Service Category Hints There may be areas not specifically captured in the categorized cost list.o E.g. Behavioral and Mental Health is a service generally not covered inMedicare. In such cases, use the categories: Other (Capture costs for non-RX services not otherwise specified) COVERED Other (Capture costs for non-RX services not otherwise specified) - NOT COVEREDPlease include an explanation/ definitions in your narrative. There may be category overlap.o E.g. Outpatient Hospital vs. Emergency Services. In such cases, use themost specific categories:Emergency ServicesWhen possible, attribute cost to target priorities Please refer to the Application User Guide for category definitions, explanationsand examples ( p 57)as well as a list of resources (p 4)32 33. Examples of Publicly-Available Resources toDevelop your Total Cost of Care EstimatesApplicants should compare their estimates on Total Cost of Care to publiclyavailable data33Example Sources Description Type of Datahttp://www.cms.gov/ResearchStatistics-Data-andSystems/Statistics-Trends-andReports/Medicare-GeographicVariation/index.htmlSource: CMSContains Medicare fee-for-service data at the state, hospital referralregion and county level. Available data include: Demographics anddisease prevalence Spending and utilization (by service category) Quality (readmissions, ED visits, avoidable hospitalizations, hospitalcompare). An easy to use interactive dashboard at the state level is alsoavailable.UtilizationGeographic DataQuality Datahttp://msis.cms.hhs.gov/ Source: CMSContains Medicaid data on various categories of health care spendingBasket of ServicesTotal Cost of Carehttp://meps.ahrq.gov/mepsweb Source: Agency for Healthcare Research and StatisticsContains private insurer informationUnit CostsTotal Unitshttp://www.resdac.org/cms-data Source: Research Data Assistance Center (ResDAC)Contains a wide array of CMS Medicaid and Medicare dataUnit CostsTotal UnitsUtilizationMembership 34. 34Examples of Publicly-Available Resources (Cont.)Applicants should compare their estimates on Total Cost of Care to publicly available dataExample Sources Description Type of Datahttps://dnav.cms.gov/ Source: CMSAn easy menu tool to find CMS dataUnit CostTotal Unitshttp://healthindicators.gov/ Source: National Center for Health StatisticsContains data on utilization and other health indicators on acommunity level from variety of sourcesBasket of ServicesTotal UnitsUnit Costshttp://www.statehealthfacts.org/Source: KaiserContains data at state level on wide variety of statistics forvariety of health care purchasersUnit CostsTotal UnitsNote: These sources are examples and are not an exhaustive list of publiclyavailable data that applicants can use. 35. Supporting Narrative and Schedules Use the application narrative and supporting schedules to explain therationale behind budget and potential savings estimates For every data point on SF424A and the Financial Plan, applicants areencouraged to explain either through narrative or supporting schedule howthat number was computed. For example,o What is included in your figure for Personnel on SF424A?o How did you arrive at your total cost of care estimate?o How did you compute your potential for reductions to total cost of care? Clearly explaining the rationale of your estimates will add credibility to yourfunding requesto Use evidence and rigorous research to support the estimates provided35 36. 36Agenda Overview Introduction to Total Cost of Care andDemonstrating your Initiatives Ability to LowerCosts through Improvement Financial Plan Next Steps 37. Submitting an ApplicationAccess application electronically at: http://www.grants.govIn order to apply all applicants must Obtain a Dun and Bradstreet Data Universal NumberingSystem (DUNS) number which can be obtained atwww.dunandbradstreet.com Register in the System for Award Management (SAM) at:https://www.sam.gov/portal/public/SAM/37 38. Upcoming WebinarsJune 26, 2013:Webinar 5: Measuring for Success/Developing anOperational Plan Driver Diagrams/Theory of Change Demonstrating measurable impact onBetter Health and Better Care Rapid cycle improvement8Webinar 6: Payment Models What is a Payment Model? What makes a Payment Model FullyDeveloped? What is a sustainable Payment Model?Webinar 7: Application Narrative and Road Map Application Narrative Awardee Selection Process & Criteria How to complete Executive Overview Helpful HintsWebinar 8: Technical Assistance for Submitting anApplicationSlides, transcripts and audio will be posted athttp://innovation.cms.gov3 39. Next Steps Additional information regarding the InnovationAwards will be posted on http://innovation.cms.gov More Questions? Please EmailInnovationAwards@cms.hhs.gov39 40. Thank You!Please use the webinar chat feature to submitquestions40